Boosting Revenue by 22% in just 30 Days
About the Company
The CBD industry in the U.S. is booming, with the market projected to surpass $20 billion in 2024*. Consumer demand for wellness and natural products is growing rapidly, with ecommerce leading the way—digital CBD sales are expected to account for over 40% of market revenue by 2025**. The growth in online shopping presents new challenges for DTC brands like Koi CBD, a leader in premium CBD products. Despite rising interest, pricing strategies for CBD remain largely untested, especially in the direct-to-consumer (DTC) space. With little historical data on price sensitivity in this relatively young market, brands are navigating uncharted territory.
Challenge
Koi recognized the need to test online product pricing after feedback indicated that some customers found prices too high. With unique products that lack direct competition, Koi wanted to find the ideal price point to balance revenue and customer satisfaction. Historically relying on MSRP and MAP pricing from their B2B team, they noticed significant differences in online versus in store customer behavior. The challenge was setting optimal digital prices without breaching restrictions, while still driving revenue and maintaining margins.
Solution
Leveraging Spresso AI’s Pricing Intelligence solution,Koi’s team was able to integrate and launch pricing agents within a few weeks. Spresso’s pricing agent allowed KOI to set a minimum price in line with MSRP and MAP rules, while dynamically testing various price points for their top-selling products. This provided KOI with valuable insights into the behavior of online shoppers and helped optimize their pricing strategy.
Spresso's pricing agent utilized first-party SKU data and site traffic information to capture customer behavior in real time. By testing multiple price points,KOI was able to supercharge their pricing strategy with rich data that informed their decision-making and automated real time price adjustments.
Aggregated Results
The dynamic pricing agents conducted during Koi’s first 30 period yielded impressive outcomes. Spresso’s always-onpricing agent detected shifts in customer demand and ultimately found different optimal price points compared to Koi’sstandard catalog rate leading to optimization in both revenue and profitability.
Additionally, Koi CBD achieved a remarkable 20x return on investment (ROI) in just the first month. By leveraging Spresso’sadvanced pricing capabilities, Koi turned a modest investment into substantial revenue gains, making the collaborationhighly profitable and sustainable.
SKU Analysis
CBD Gummy
25% Revenue Lift and 19% Profit Lift
The pricing agent identified a lower price point that significantly boosted conversion rates leading to anincrease in revenue by 25% and a 19% increase in profit margins. Spresso allowed Koi to capture more customers while stillmaintaining healthy profit margins.
CBD Vape
115% Revenue Lift and 189% Profit Lift
In contrast, the pricing agent found a higher price point that drove a substantial revenue increase of 115%, andprofit margins skyrocketed by 189%. This SKU showed that certain products, even at a higher price, could maintain strongdemand, underscoring the importance of continuous price testing.
